QuantumSphere Inc., a young Santa Ana company that makes nano-metals, proves that it pays to build good relationships with your suppliers and investors.

QSI has had a strategic relationship for two years with OM Group of Ohio, the world’s largest supplier of cobalt and related products. So when Chief Executive Kevin Maloney went out looking for $10 million in institutional money, OMG was one of those he approached.

OMG stepped to the plate, as did San Diego hedge fund Bricoleur Capital Management. Existing investors believe so much in the company’s future that they wanted more shares as well.

Nanotechnology has been hot and cold in recent years, as some makers have promised more than they could deliver – think cures for cancer – but QSI must be doing something right. Maloney accepted $11 million in exchange for QSI common stock and turned down another $3 million.

OMG wasn’t just playing sugar daddy. OMG Chairman Joseph Scaminace said, “We believe that this long-term partnership with QuantumSphere will be an important piece of our effort to leverage our portfolio of specialty materials and clean technology products.”

Likewise, Tolga Demir of Bricoleur said his company invested in QuantumSphere because, “We think that the company has some unique technology related to manufacturing of nano-metals and believe the market for these metals will increase over the coming years.”

A nano is a unit of measure about three to five ATOMS long. A human hair is 100,000 times thicker.

QSI’s patented process is developing nano-metals that show promise in fuel cells, batteries and military applications. One of the world’s largest battery makers will use QSI nano-metals in a button battery that is 320 percent more powerful than those currently on the market, Maloney said. That battery should hit the market in 2008.

QSI will use the $11 million investment to expand manufacturing, for research and development on more applications, fund product development in hydrogen (used in fuel cells), and sales and marketing.